Hello everyone, My name is Tom Simeo, CEO and Chairman of SinoCubate, Inc., "SBAT". I am committed to provide great shareholder value for our investors, and I believe we have a great story to tell. Up until recently we were a shell company, which is no longer the case. Our business is to assist companies in the US and in emerging growth market to become publicly listed in the US in onsideration for a fee, comprising equity in our client companies.
Latest 10-K As can be seen in our latest 10-K, filed on April 16, 2012, we have several new clients and I believe the future looks good for us. Further, we also disclosed in the 10-K that in addition to working in China, SinoCubate will also provide the same service in the US and other emerging growth markets. That does not mean we are abandoning China. We are strong believers in the Chinese economy and its entrepreneurs and the 0.5% decline in the Chinese GDP does not man much. It was was still 8.1% for the first quarter of 2012. Which country beats that?
Chinese consumer market I am a strong believer in the Chinese consumer market. Of the estimated 1.6 billion people in China, we have about 200 - 400 million in the middle class, depending on definition. This middle class is growing rapidly and consumer goods in China will be very interesting for the years to come. The Chinese government is deliberately creating mega cities as never seen before, and Shanghai itself has an estimated 27 million people. This urbanization of farmers, creates demands in form of consumer spending and it is amazing to participate in this transformation of wealth.
Current valuation of China stock. Of the many hundreds of Chinese based companies that went public in the US, some had irregularities in their audits and did not do the right thing, and I definitely do not condone that. We must, however, remember that these entrepreneurs received advise from bankers, lawyers and auditors, which should share in the blame. I do believe the US investor sentiment is coming back towards the China based US listed companies. It just doesn't make sense to me that one company with sustained earnings and growth - with no irregularities - listed for years in the US, should trade at a P/E around 1, or sometimes even below their cash, when other non-China based companies have a considerably higher valuation.
Chinese companies are coming back to the US I have during the lions part of the past three years, spend most of my time here in China, interviewing, working with and investigated hundreds of Chinese companies, and I am very confident that we will see many good Chinese companies seeking listing and financing in the US again. Remember, that there are about 3,000 companies (and growing) on the waiting list to become public in China, of which many will not be able to list, because as opposed to the US, Chinese companies have to go through an approval process. In addition to those, there are many excellent companies in good industries with great management in need of additional growth capital, and why will they come to the US?
The banks will only lend to the ones that really do not need the cash. The VC / PE funds are now reluctant to invest because of new stricter tax rules and more realistic valuations of companies listed in China. Going public in China is very cumbersome. Therefore, if the company still aims for growth capital and cannot obtain it in China, of the foreign markets available, the US will many times be their priority.
I hope to build up long-term shareholders that share my vision and believe in what I am doing. Within the frame of legality, I will answer any questions here or by email that I consider not to be insider information. Thank you for reading.